Insider Weekends: Tile Shop Insiders Continue Buying After Company Decides To Delist

Welcome to edition 488 of Insider Weekends. Insider buying increased last week with insiders purchasing $55.06 million of stock last week compared to $37.67 million in the week prior. Selling on the other hand decreased with insiders selling $425.06 million of stock last week compared to $469.25 million in the week prior.

Sell/Buy Ratio: The insider Sell/Buy ratio is calculated by dividing the total insider sales in a given week by total insider purchases that week. The adjusted ratio for last week declined to 7.72. In other words, insiders sold almost 8 times as much stock as they purchased. The Sell/Buy ratio this week compares favorably with the prior week, when the ratio stood at 12.46.

Insider Sector Heat Map October 25, 2019

Insider Sector Heat Map October 25, 2019 (click to enlarge)

Note: As mentioned in the first post in this series, certain industries have their preferred metrics such as same store sales for retailers, funds from operations (FFO) for REITs and revenue per available room (RevPAR) for hotels that provide a better basis for comparison than simple valuation metrics. However metrics like Price/Earnings, Price/Sales and Enterprise Value/EBITDA included below should provide a good starting point for analyzing the majority of stocks.

Notable Insider Buys:

1. Tile Shop Holdings, Inc. (TTS): $1.63

Shares of this home improvement products retailer were acquired by 2 insiders:

  • Director Peter H. Kamin acquired 3,074,869 shares, paying $1.58 per share for a total amount of $4.85 million. 1,258,184 of these shares were purchased indirectly by various trusts and entities.
  • Director Peter J. Jacullo Jr. acquired 2,372,551 shares, paying $1.57 per share for a total amount of $3.73 million. These shares were purchased indirectly through a trust.

We wrote the following last month about an insider purchase at modular flooring company Interface (TILE),

It appears that directors of three different flooring companies include two manufacturers and one retailer appear to be bullish on the prospects of the flooring business even as the stocks of all three companies have had a rough year as you can see from the chart below. All three appear to be in an uptrend in recent week as investors rotate out of growth and into value names.

All three companies trade for less than 10 times EBITDA but their biggest challenge appears to be top line growth, or lack thereof. The double digit top line growth at Interface is driven by an acquisition by the company last year. Mohawk (MHK) has the best operating margins, lowest valuation and least leverage balance sheet of the three. Unfortunately it is barely growing and has exposure to China both as a country it sources from and sells to.

One Year Chart Interface, Mohawk and Tile Shop.

One Year Chart Interface, Mohawk and Tile Shop. Source: Yahoo Finance. (click to enlarge)

Since then both Mohawk and Interface reported quarterly earnings and both stocks have done well with Mohawk appreciating 11% on Friday and Interface posting a gain of 8.5%. While Interface posted 9.4% revenue growth (2% organic revenue growth), Mohawk’s revenue declined 1.2%. Despite those anemic growth rates, both companies beat estimates and the stocks rebounded.

Tile Shop Holdings has unfortunately headed in the opposite direction with the stock dropping sharply a week ago after the company suspended its dividend, ended its share repurchase program and decided to voluntarily delist itself from the Nasdaq next month. The value destruction at Tile Shop Holdings has been astonishing. This sub $2 stock traded for over $20 in mid-2017. The weakness in housing and the trade war hurt Interface, Mohawk and Tile Shop Holdings but Tile Shop has been the worst hit of the lot with the stock losing more than 90% of its value. This is another example of either avoiding an industry that is in secular decline or if you must invest, pick the strongest companies in the industry.

You can view the list of recent insider transactions for Tile Shop Holdings, Inc. here.

P/E: N/A Forward P/E: 32.6 Industry P/E: 24.22
P/S: 0.24 Price/Book: 0.61 EV/EBITDA: 8.54
Market Cap: $82.82M Avg. Daily Volume: 909,513 52 Week Range: $1 – $7.99

2. OPKO Health, Inc. (OPK): $1.44

Shares of this devices and drug development company were acquired by 4 insiders:

  • CEO & Chairman Phillip Frost M.D. acquired 2,000,000 shares, paying $1.50 per share for a total amount of $3 million. These shares were purchased indirectly by Frost Gamma Investments Trust.
  • Vice Chairman & CTO Jane Hsiao acquired 400,000 shares, paying $1.50 per share for a total amount of $600,000.
  • Director Richard C. Pfenniger acquired 25,000 shares, paying $1.45 per share for a total amount of $36,242. Mr. Pfenniger increased his stake by 10.00% to 275,000 shares with this purchase.
  • Executive VP-Administration Steven D. Rubin acquired 15,000 shares, paying $1.50 per share for a total amount of $22,500. Mr. Rubin increased his stake by 0.26% to 5,744,147 shares with this purchase.

You can view the list of recent insider transactions for OPKO Health, Inc. here.

P/E: N/A Forward P/E: -6.26 Industry P/E: 517.72
P/S: 0.96 Price/Book: 0.52 EV/EBITDA: -8.76
Market Cap: $886.47M Avg. Daily Volume: 4,393,729 52 Week Range: $1.33 – $3.94

3. Assured Guaranty Ltd. (AGO): $46.64

Chief Investment Officer Andrew T. Feldstein acquired 69,400 shares of this insurance company, paying $46.79 per share for a total amount of $3.25 million. Mr. Feldstein increased his stake by 53.76% to 198,500 shares with this purchase.

You can view the list of recent insider transactions for Assured Guaranty Ltd. here.

P/E: 11.06 Forward P/E: 13.96 Industry P/E: 14.81
P/S: 4.71 Price/Book: 0.69 EV/EBITDA: N/A
Market Cap: $4.6B Avg. Daily Volume: 545,732 52 Week Range: $36.13 – $47.97

4. JPMorgan Chase & Co. (JPM): $126.03

Director Mellody L. Hobson acquired 16,000 shares of JP Morgan, paying $124.65 per share for a total amount of $1.99 million. These shares were purchased indirectly through a trust.

Ms. Hobson made several $2 million purchases of JP Morgan since she joined the board last year including once last April and thrice this year. The most memorable purchase at JP Morgan was Jamie Dimon’s February 2016 purchase where he picked up over $26.5 million worth of stock at an average price of $53.18.

You can view the list of recent insider transactions for JPMorgan Chase & Co. here.

P/E: 12.44 Forward P/E: 11.96 Industry P/E: 10.78
P/S: 3.68 Price/Book: 1.71 EV/EBITDA: N/A
Market Cap: $395.29B Avg. Daily Volume: 11,436,649 52 Week Range: $91.11 – $126.65

5. Eli Lilly and Company (LLY): $110.2

Shares of Eli Lilly were acquired by 2 insiders:

  • President & CEO David A. Ricks acquired 4,615 shares, paying $108.38 per share for a total amount of $500,174. Mr. Ricks increased his stake by 3.02% to 157,405 shares with this purchase.
  • Director Jackson P. Tai acquired 1,861 shares, paying $107.49 per share for a total amount of $200,039. Mr. Tai increased his stake by 3.41% to 56,440 shares with this purchase.

You can view the list of recent insider transactions for Eli Lilly and Company here.

P/E: 13.35 Forward P/E: 16.8 Industry P/E: 33.88
P/S: 4.27 Price/Book: 36.29 EV/EBITDA: 15.92
Market Cap: $106.39B Avg. Daily Volume: 3,424,296 52 Week Range: $101.36 – $132.13

You can view the full list of purchases from this Insider Buying page.

Notable Insider Sales:

1. Facebook, Inc. (FB): $187.89

Shares of Facebook were sold by 2 insiders:

  • COB and CEO Mark Zuckerberg sold 624,668 shares for $187.46, generating $117.1 million from the sale. These shares were sold indirectly through various entities
  • Chief Operating Officer Sheryl Sandberg sold 55,000 shares for $184.74, generating $10.16 million from the sale. These shares were sold indirectly through a trust.

You can view the list of recent insider transactions for Facebook, Inc. here.

P/E: 31.78 Forward P/E: 19.78 Industry P/E: 28.90
P/S: 8.56 Price/Book: 6.04 EV/EBITDA: 18.54
Market Cap: $536.04B Avg. Daily Volume: 13,148,227 52 Week Range: $123.02 – $208.66

2. BlackRock, Inc. (BLK): $459.8

Chairman and CEO Laurence Fink sold 44,443 shares of this asset management company for $457.09, generating $20.31 million from the sale.

You can view the list of recent insider transactions for BlackRock, Inc. here.

P/E: 17.76 Forward P/E: 15.3 Industry P/E: 16.85
P/S: 5.11 Price/Book: 2.24 EV/EBITDA: 12.68
Market Cap: $71.52B Avg. Daily Volume: 593,213 52 Week Range: $360.79 – $487.45

3. Garmin Ltd. (GRMN): $87.23

Executive Chairman Min H. Kao sold 172,121 shares of this GPS manufacturer for $87.29, generating $15.02 million from the sale. These shares were sold indirectly by Mr. Kao’s children.

You can view the list of recent insider transactions for Garmin Ltd. here.

P/E: 22.49 Forward P/E: 21.33 Industry P/E: 27.28
P/S: 4.79 Price/Book: 3.99 EV/EBITDA: 16.85
Market Cap: $16.58B Avg. Daily Volume: 1,022,676 52 Week Range: $59.98 – $89.72

4. Accenture plc (ACN): $183.07

Shares of Accenture were sold by 9 insiders:

  • Group Chief Exec-Growth Mkts Gianfranco Casati sold 29,612 shares for $185.65, generating $5.49 million from the sale.
  • Chief Executive Officer Julie Spellman Sweet sold 12,961 shares for $185.69, generating $2.41 million from the sale.
  • Group Chief Exec – Health & PS Daniel T. London sold 5,421 shares for $185.69, generating $1 million from the sale.
  • Executive Chairman David Rowland sold 4,725 shares for $185.15, generating $874,821 from the sale.
  • Group Chief Executive-Fin Serv Domingo Miron sold 4,500 shares for $183.77, generating $826,951 from the sale. 1,379 of these shares were sold as a result of exercising options immediately prior to the sale.
  • Chief Operating Officer Johan DeBlaere sold 3,000 shares for $185.42, generating $556,260 from the sale.
  • Chief Accounting Officer Richard P. Clark sold 2,752 shares for $185.70, generating $511,055 from the sale.
  • Group Chief Exec-Resources Jean-Marc Ollagnier sold 2,663 shares for $185.21, generating $493,210 from the sale.
  • General Counsel, Sec & CCO Joel Unruch sold 804 shares for $186.68, generating $150,092 from the sale.

You can view the list of recent insider transactions for Accenture plc here.

P/E: 24.87 Forward P/E: 21.34 Industry P/E: 32.98
P/S: 2.7 Price/Book: 8.09 EV/EBITDA: 15.41
Market Cap: $116.6B Avg. Daily Volume: 1,938,807 52 Week Range: $132.63 – $202.8

5. The Boston Beer Company, Inc. (SAM): $375.56

Chairman James C. Koch sold 21,000 shares of this beverage company for $400.15, generating $8.4 million from the sale.

You can view the list of recent insider transactions for The Boston Beer Company, Inc. here.

P/E: 39.7 Forward P/E: 32.63 Industry P/E: 22.28
P/S: 4.12 Price/Book: 8.23 EV/EBITDA: 23.43
Market Cap: $4.55B Avg. Daily Volume: 212,566 52 Week Range: $230.93 – $444.65

You can view the full list of sales from this Insider Sales page.

The list of all insider purchases and sales by management people is only available to InsideArbitrage Premium members.

Disclaimer: Please do your own due diligence before buying or selling any securities mentioned in this article. We do not warrant the completeness or accuracy of the content or data provided in this article.

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